Here is an acquisition in three steps. Always use the partial method for goodwill and non-controlling interests

Here is an acquisition in three steps. Always use the partial method for goodwill and non-controlling interests. Step 1: On 1 January 2017, AMIR purchases 5% of TALGAL for £60m. At this date, the summarised balance sheet of TALGAL is: ————————————————————-£m Net assets———————————————–500 Share capital——————————————-(100) Retained profit—————————————–(400) This balance sheet does not include an intangible asset with a fair value of £150m. The summarised profit and loss account of TALGAL for the year ended 31/12/2017: ——————————————————-£m
Profit after tax————————————200
Dividends—————————————–(80) Retained profit for the year——————(120)
Step 2: On 1 January 2018 when the fair value of the existing investment is £75and the fair value of the intangible asset has increased to £380m, AMIR purchases a further 55% of TALGAL for £800m. The summarised profit and loss account of TALGAL for the year ended 31/12/2018:
——————————————————-£m
Profit after tax————————————570 Dividends—————————————–(180) Retained——————————————(390) Step 3: Finally, on 1 January 2019, when the fair value of the existing investment in TALGAL is £1,600 and the fair value of the intangible asset has increased to £490m, AMIR purchased the remaining 40% of TALGAL for £950m. Here is a summary of the details: In £m——————————–1.1.17—————-1.1.18————–1.1.19 Purchase%————————-5%———————55%—————-40%
Consideration———————-60———————-800—————–950
FV of existing investment——–0———————–75——————-1,600 FV of Intangible———————150——————–380—————–490
BV of Net Assets——————–500——————–620—————–1,010
18. What is the total amount of gains/losses recorded in the profit and loss account as a result of this acquisition? Consider all steps. 19. What is the total amount of goodwill recorded in the acquisitions? Consider all steps.


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